Jordan v. United Insurance Company of America, 15994.

• Decision Date: 30 March 1961
• Docket Number: No. 15994.,15994.
• Citation: 110 US App. DC 112,289 F.2d 778
• Parties: Albert F. JORDAN, Superintendent of Insurance for the District of Columbia, Appellant, v. UNITED INSURANCE COMPANY OF AMERICA, a corporation, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

110 US App. DC 112, 289 F.2d 778 (1961)

Albert F. JORDAN, Superintendent of Insurance for the District of Columbia, Appellant, v. UNITED INSURANCE COMPANY OF AMERICA, a corporation, Appellee.

No. 15994.

United States Court of Appeals District of Columbia Circuit.

Argued February 8, 1961.

Dated March 30, 1961.

Mr. Milton D. Korman, Principal Asst. Corp. Counsel for the District of Columbia, with whom Messrs. Chester H. Gray, Corp. Counsel, Hubert B. Pair and H. Thomas Sisk, Asst. Corp. Counsel, were on the brief, for appellant.

Mr. Harry L. Brown, Washington, D. C., with whom Messrs. Fred W. Peel, George E. Allen, Washington, D. C., and Edward B. McGuinn, Chicago, Ill., were on the brief, for appellee. Mr. John J. Schlick, Washington, D. C., also entered an appearance for appellee.

Before MR. JUSTICE BURTON, retired,^* and DANAHER and BASTIAN, Circuit Judges.

BASTIAN, Circuit Judge.

This is an appeal from a judgment of the District Court rendered in favor of appellee (hereinafter called plaintiff), setting aside a ruling of appellant, Superintendent of Insurance of the District of Columbia (hereinafter called defendant), which denied renewal of plaintiff's certificate of authority to operate as an insurance company in the District of Columbia for the license year which began May 1, 1959, and directing the defendant to issue to plaintiff a certificate of authority for that license year, in accordance with § 35-404 D.C.Code (1951, Supp. VIII, 1960).¹

The amended complaint herein alleged, among other things:

"That plaintiff is a corporation, organized under the laws of the State of Illinois, which is engaged in the business of life, health, and accident insurance in the State of Illinois, the District of Columbia, and other places.

"That defendant duly issued to the plaintiff a certificate of authority under section 35-404 of the District of Columbia Code (1951 edition, as amended) to operate as an insurance company in the District of Columbia for more than ten consecutive license years immediately preceding the license year which began May 1, 1959. Plaintiff filed a timely application, in proper form, for renewal of its certificate of authority for the license year which began May 1, 1959. On April 17, 1959, defendant addressed a letter to plaintiff² in which he stated that, in view of having found substantial evidence of five charges enumerated therein, he would not renew plaintiff\'s certificate of authority for the license year beginning May 1, 1959, until he was satisfied with respect to such charges."

It further appears from the amended complaint that a hearing was requested and was held on the five charges contained in defendant's letter of April 17. On August 11, 1959, defendant addressed a letter to plaintiff in which he stated that he declined to issue the renewal of plaintiff's certificate of authority for the license year beginning May 1, 1959, basing his refusal on the charges contained in the original letter of April 17.

The amended complaint then avers that the charges contained in defendant's letter of April 17 were not supported by the evidence and testimony adduced at the hearing; that none of the charges provided a valid basis for defendant's refusal to renew the certificate of authority; and that defendant's refusal to renew the certificate of authority was unreasonable, discriminatory, arbitrary, capricious and violative of due process.

Plaintiff filed a motion for preliminary injunction. Defendant, in turn, filed a motion to dismiss the complaint or, in the alternative, for summary judgment. The District Court denied defendant's motion, issued a preliminary injunction, and directed a trial de novo.

Thereupon, defendant filed an answer to the amended complaint and admitted that plaintiff had a right to appeal to the United States District Court for the District of Columbia pursuant to § 35-427 D.C.Code,³ (a position which defendant, on this appeal, now denies). The answer denied that the action of defendant was arbitrary and capricious.

The case thereupon proceeded to a trial de novo in the District Court, at which witnesses were called and the administrative record offered in evidence. At the conclusion of the case, the court entered extensive and full findings of fact and conclusions of law, finding, among other things, that failure to renew plaintiff's certificate of authority "would have a substantial adverse effect upon the holders of approximately 75,000 policies of insurance and would destroy a substantial going business built up over a fifteen-year period."

The court further held that the burden was upon plaintiff to establish by a preponderance of the evidence its claim that defendant's refusal to renew the certificate of authority was arbitrary and capricious in that the findings upon which defendant based his refusal were not supported by substantial evidence or did not afford a proper basis for the determination reached by defendant; that the evidence adduced at the trial de novo did preponderate in favor of plaintiff; and that:

"There was no substantial evidence before the defendant justifying his conclusion that he was not satisfied that plaintiff is qualified under the laws of the District of Columbia so as to do business therein, or his conclusion that he was not satisfied that plaintiff is worthy of public confidence.

"Defendant\'s charges against plaintiff do not describe a basis, under section 35-404, District of Columbia Code, 1951 Edition, as amended, for the refusal to renew plaintiff\'s certificate of authority to operate in the District of Columbia.

"The insurance business is imbued with a public interest. The plaintiff did not use its certificates of authority heretofore issued to it in a manner contrary to the public interest or contrary to law.

"On the basis of the evidence adduced before it, the Court concludes that the plaintiff is qualified under the laws of the District of Columbia so as to do business therein and that plaintiff is worthy of public confidence.

"Renewal of plaintiff\'s certificate of authority to operate in the District of Columbia would not adversely affect the public interest; failure to renew it would have an adverse effect on the public interest.

"Plaintiff is entitled to the renewal of its certificate of authority to operate in the District of Columbia."

Judgment was accordingly entered for plaintiff as above stated, and this appeal followed.

I

We are here concerned with a narrow question of law, whether the trial de novo held in the District Court was proper or whether that court should have confined itself to review of the administrative record under the substantial evidence rule. Counsel for defendant concedes that if the trial de novo was proper, the action ultimately taken by the District Court was also proper.

We begin with the basic proposition that once a going business has been established on the basis of a license or certificate of authority, property rights attach. This means that such license or certificate may not be revoked, nor may renewal be denied, without procedural and substantive due process of law. In re Carter, 89 U.S.App.D.C. 310, 192 F.2d 15, certiorari denied, 1951, 342 U.S. 862, 72 S.Ct. 89, 96 L.Ed. 648, and Judge Miller's concurring opinion, 89 U.S.App. D.C. at page 320, 192 F.2d at page 25; In re Carter, 85 U.S.App.D.C. 229, 177 F.2d 75, certiorari denied, 1949, 338 U.S. 900, 70 S.Ct. 250, 94 L.Ed. 554; Minkoff v. Payne, 1953, 93 U.S.App.D.C. 123, 210 F.2d 689; Columbia Auto Loan v. Jordan, 1952, 90 U.S.App.D.C. 222, 196 F. 2d 568; Jordan v. American Eagle Fire Ins. Co., 1948, 83 U.S.App.D.C. 192, 169 F.2d 281.

II

Defendant contends that the hearing conducted in response to plaintiff's request after receipt of the letter of April 17 satisfied at least the minimum requirements of due process and plaintiff, having received a due process hearing, was not entitled to a second hearing on the merits before the District Court. Therefore, defendant contends, the District Court had no jurisdiction to determine more than whether defendant acted arbitrarily or capriciously and whether substantial evidence on the administrative record supported defendant's conclusions. We agree with defendant that plaintiff is not entitled to two due process hearings. But the problem of this case lies in determining where, under the applicable statutes, the one hearing to which plaintiff was entitled should properly have been held.

By its express terms, § 35-404 does not require that a hearing be conducted, but speaks only of an investigation. The initial stages of the investigation which defendant conducted were ex parte. In American Eagle, supra, in discussing another section of the Code, we said:

"There is no reason to take the term `investigation\' at other than its face value. A quasi-judicial hearing, at which opposing parties present their claims and evidence and have their controversies determined, is not an `investigation\', and a requirement that there be an investigation carries with it no command that a quasi-judicial hearing be conducted." 83 U.S.App.D.C. at page 196, 169 F.2d at page 285.

We then noted with emphasis § 35-1340, which expressly requires the Superintendent of Insurance to conduct an investigation to determine whether or not to revoke a license, and to afford the licensee a hearing if it were determined, after investigation, that the license should be revoked.

We also noted, in American Eagle, that no express power was granted the Superintendent to do many of the things which are included in a quasi-judicial hearing by definition, such as administering oaths and subpoenaing witnesses and documents. We further noted that the Superintendent was not required to make findings of fact and conclusions of law, nor was a record of the proceeding required. Those observations are equally pertinent here. While the Superintendent does have subpoena power and the power to administer oaths in some ...